dax daily outlook tues 01 sep potential push up above 10060 support 1175142015

(Click to enlarge chart)

Key elements

• The German 30 Index (proxy for the DAX) has plummeted in this morning, Asian trading session. This fall is largely triggered by weak manufacturing data from China’s Purchasing Managers Index (PMI) for the month of August 2015 that came in a reading of 49.7. A dip below the 50 level indicates contraction in the Chinese manufacturing sector.
• Interestingly, the decline in price action of the Index has led it to test the 10060 support (lower limit of the neutrality range as per highlighted in our latest weekly outlook, click link for more details.)
• The 1060 support also now corresponds with the 50% Fibonacci retracement of the recent up move from 26 August 2015 low @7am to 28 August 2015 high @8am. In addition, the hourly (short-term) Stochastic oscillator has just exited from its oversold region which indicates a revival in upside momentum.

Key levels (1 to 3 days)

Pivot (key support): 10060

Resistance: 10310 & 10440

Next support: 9730

Conclusion

As long as the 10060 daily pivotal support holds, short-term technical elements are advocating for a potential push up to the recent range top at 10310 with a maximum limit set at the upper limit of the weekly neutrality range of 10440.

On the flipside, a break below the 10060 pivotal support is likely to open up scope for a further slide to target the next support at 9730.

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